In Ohio the amount a broker may charge for commission is:
Audio Lesson
Duration: 2:49
Question & Answer
Review the question and all answer choices
6.00%
A is incorrect because Ohio law does not mandate a fixed 6% commission rate. This option represents a common misconception that commissions are standardized by law.
Up to 6%
B is incorrect because there is no 'up to 6%' maximum commission established by Ohio law. This option incorrectly suggests a legal cap that doesn't exist.
Up to 7%
C is incorrect because Ohio law does not establish a 7% maximum commission rate. This is another distractor suggesting a fixed percentage limit.
Negotiable in the listing contract
Why is this correct?
D is correct because Ohio law does not set maximum commission rates. Commissions are entirely negotiable between brokers and clients, with the specific terms documented in the written listing contract.
Deep Analysis
AI-powered in-depth explanation of this concept
Commission structures are fundamental to real estate practice as they directly impact how agents and brokers earn income and how consumers pay for services. This question tests understanding of Ohio's commission regulations, specifically that commission amounts are negotiable rather than fixed by law. The question appears straightforward but contains distractor options suggesting fixed percentages that don't exist in Ohio. Students must recognize that real estate commissions are always negotiable between parties, with the specific terms documented in the listing agreement. This concept connects to broader real estate knowledge about agency relationships, contract law, and consumer protection regulations that ensure transparency in real estate transactions.
Knowledge Background
Essential context and foundational knowledge
Commission negotiability is a fundamental principle in real estate law across the United States. Real estate commissions are not set by law but are negotiated between brokers and their clients. This principle stems from the nature of real estate brokerage as an independent contractor relationship and free-market economy. In Ohio, as in most states, the Real Estate Commission does not regulate commission amounts, only that they must be clearly disclosed in the agency disclosure and listing agreements. This flexibility allows for competitive pricing and various commission structures based on property type, market conditions, and services provided.
Think of real estate commissions like negotiating the price of a car - there's no set price, only suggested starting points that can be negotiated up or down based on market conditions and services included.
When you see commission questions on the exam, immediately think 'negotiable' rather than a fixed percentage.
For commission questions, remember the key principle: commissions are always negotiable unless the question specifically states otherwise. Avoid options suggesting fixed percentages.
Real World Application
How this concept applies in actual real estate practice
A new listing agent meets with sellers who insist on a 6% commission because 'that's the standard.' The agent explains that while 6% is common, they can negotiate based on market conditions and services offered. After discussing the local market and the agent's marketing plan, they agree to a 5.5% commission with a 60-day guarantee clause. This negotiated rate is then clearly documented in the listing agreement, showing how commission flexibility works in practice.
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